More on the Mayor’s payday lending ordinance

From the Chron story on Mayor Parker’s proposed payday lending ordinance, which is described as having been toughened up from an earlier proposal:

Mayor Annise Parker

Mayor Annise Parker

Consumer groups had called [City Attorney David] Feldman’s compromise proposal too weak; he said he preferred tougher restrictions but said those were unlikely to pass the Legislature, would invite a lawsuit, and could force lenders outside city limits, hurting borrowers’ access to credit.

That was the concern for members of the Freedmen’s Town Association who attended Friday’s news conference, one of whom grumbled, “Yes you are,” when Parker said, “We’re not trying to put payday lenders out of business.”

LoneStar Title Loans has given the Freedmen’s Town group almost $300,000 over the last six years, board member John Fenley said.

No one would use payday lenders if banks, nonprofits or churches would offer them low-interest loans, association volunteer Ayanna Mitchell said.

“When they run these industries out of the communities, where are they going to get the money from?” she said. “People are going to get the money they need whether they go to a title lender or they go around the corner and get it from somebody who’s not regulated at all, who, instead of taking your car, will do other things to you.”

I understand the concern about access to credit, but the solution isn’t payday lenders and their usury. The solution is making affordable financing more widely available in places and communities where it currently isn’t. That’s not something the city of Houston can do, but putting a tighter leash on payday lenders is. It’s a matter of consumer protection, and it’s about time we had it in Houston. Payday lenders have a deserved reputation for being predatory, and state laws regulating them, even after a bill was passed in the 2011 session, are notoriously lax. Frankly, if the industry doesn’t like what the cities are doing to curb their excesses and protect their residents, they should have worked with Sen. Wendy Davis, Rep. Tom Craddick, and other members of the Legislature that were trying to pass reasonable reforms instead of impeding and obstructing them every step of the way. I have no sympathy for them at all. The Observer and BOR have more.

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2 Responses to More on the Mayor’s payday lending ordinance

  1. John says:


    not sure I agree with the statement “The solution is making affordable financing more widely available in places and communities where it currently isn’t. ”

    You can’t force banks to open up branches in areas where the demographics have poor FICO scores. Just drive some of these areas and you will not see a Chase or Wells Fargo, this will only serve to increase business for the unregulated lenders. For better or worse payday lenders are the best option. Loans are still extremely tight right now, I have a nearly 800 FICO was buying a home with more than 30% cash down. I got turned down by two banks until a third (through a friend) finally gave me a mortgage. The 2008 crash has swung the pendulum too far and bank underwriting criteria has become too stringent

  2. Bill says:

    Tom Craddick deserves a lot of credit on this issue, and that’s saying something. Very good on you on this issue, Rep.

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